Global Market Highlights
The DJIA weakened by -0.17% on Tuesday (20/02), followed by the S&P 500 (-0.60%) and the Nasdaq (-0.92%). Wall Street slumped as investors are awaiting the release of minutes from the Fed, following the inflation data last week which lowered expectations for interest rate cuts. Additionally, investors tend to wait and see for the FY23 earnings release from companies this week. Today the market will be looking forward to several data releases such as: 1) US MBA Purchase Index Jan-2024; 2) US MBA 30Y Mortgage Rate; 3) JP Balance of Trade Jan-2024.
Domestic Update
The government formalized the provision of electric car incentives through Minister of Finance Regulation (PMK) No. 8/2024 concerning DTP VAT for the 2024 fiscal year, with the DTP VAT period starting from Jan-2024 to Dec-2024. MNCS Comment: We note that the minimum TKDN requirements for electric cars are 40%, electric buses are 20 to 40%, with the DTP VAT amount reaching 10% from the normal rate of 11%. This policy is targeted to stimulate the adoption of EV vehicles and develop the Indonesian EV ecosystem as an effort to downstream the Indonesian nickel industry. However, we have not seen a direct impact on automotive issuers considering that electric cars with a TKDN of 40% currently only include the Wuling, Chery and Hyundai brands.
Company News
1. BNGA IJ recorded a net profit of IDR6.5 trillion; or grew 28.4% YoY in FY23 (Kontan). MNCS Comment: We note that this profit achievement is in line with the growth in credit distribution which grew 8.5% YoY to reach IDR213.4 trillion. The highest credit growth came from the sharia segment which grew 17% YoY to reach IDR55.2 trillion, but the largest credit contribution still came from corporate credit which reached IDR83.4 trillion (11.7% YoY growth). Currently BNGA is trading at 1.05x PBV.
2. SIDO IJ recorded a net profit of IDR950.6 billion in FY23, a decrease of -13.9% YoY (Kontan). MNCS Comment: SIDO's net profit in FY23 exceeded our expectations, reflecting 109.2% of the FY23 target. The decline in net profit was accompanied by a -7.8% YoY decrease in revenue to IDR3.6 trillion in FY23 (vs IDR3.9 trillion in FY22). The herbal segment, contributing 65.9% of total turnover, experienced a decline of -10.8% YoY. We attribute this decrease to weak purchasing power impacting SIDO's products, in line with the effects of the Strong El-Nino starting in 3Q23. SIDO is currently trading at 18.30x/5.14x PER/PBV.
3. ASSA IJ aims for IDR4.8 tn revenue with IDR1.6 tn capex in FY24E (Kontan). MNCS Comment: Management is optimistic to set positive growth on both top and bottom lines this year despite significant revenue drops -25.27% YoY and net profit -9.91% YoY in 9M23. We view expectation is accomplished with management’s business strategies this year, such as actively converting the logistic segment to end-to-end integrated logistic service to reduce costs. Additionally, expansion will be done by adding more vehicle units to fulfill the rental demand. ASSA is currently trading at 21.69x/0.97x PER/PBV.
IHSG Updates
The JCI strengthened by +0.77% to 7,352.60 on Tuesday (20/02), Most sectors experienced gains and driving the index, led by the financial sector (+1.24%) and followed by the industrial sector (+0.92%). On the other hand, sectors that saw declines were led by the energy sector (-1.13%) and followed by the healthcare sector (-0.21%). The index successfully rebounded amid Asian markets closing mixed, as investors responded positively to the PBoC's decision to lower the 5Y loan prime rate by -25 bps to 3.95% (vs consensus of 4.05%). The Rupiah closed lower at IDR15,660/USD. We estimate the IHSG will move within the price range of 7,309-7,370. Today's Recommendations: BIRD, MARK, MEDC, SMGR.
Corporate Actions
EGMS: BBSI, NTBK, SAPX
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